Your auto insurance policy should be in force when you need it. Your insurer should cover any costs incurred if you are in an accident or your vehicle is stolen. This is why you have coverage. What happens if your policy gets cancelled? What can you do to avoid cancellation?
We’ll be presenting the top three reasons that auto insurance companies cancel policies of their customers. We’ll also explain what you can expect if your insurer cancels your policy.
#1 – Lies to Your Insurer
When applying for coverage, it’s easy to lie. You might decrease the miles you drive each year, or you might not mention certain aftermarket parts that you have installed on your vehicle. Or, you might forget to mention that your car is used for business purposes. These misrepresentations may seem trivial. Your insurer may see things differently.
You risk losing your policy if you lie about your application. Your rates are determined by the insurer’s presumption that you are at risk. Imagine driving 5,000 miles per year while claiming that you are actually driving 15,000 miles. You are more likely to be in an accident the longer you drive. This increases your chances of filing a claim.
Your insurance company might adjust your rates to match your circumstances. They might cancel your policy and void your coverage.
#2 – Loss of Driving Privileges
Your auto insurance will likely cancel your coverage if your driving privileges are removed. This is because you shouldn’t drive if you are prohibited by law. Your insurer may be more at risk if your driver’s licence was revoked, suspended, or in other circumstances.
Many people try to conceal the fact that their driver’s licenses were suspended. An insurer will notice this. Car insurance companies frequently check the driving records of policyholders to ensure that they are aware of any changes. Your record will be inspected for license suspensions, DUIs and other similar issues. It is futile to hide them.
#3 – Nonpayment or late payment of premiums
This is the leading reason why auto insurance policies are canceled. A lot of consumers fail to pay their premiums or are late with payments. For policyholders who have a track record of timely payments, insurers often offer a grace period. Some companies have shorter grace periods (e.g. Some companies may have a short grace period (e.g., a few days) or none at all. You could lose your coverage if you don’t pay your premiums in time.
Consumers who switch to lower rates often find themselves in default of their premiums. Nonpayment can cause their policies to become invalid. The policies are actually cancelled which has long-term implications.
The Consequences of Cancelling Your Auto Insurance Policy
Cancellation of policies can cause insurance companies to steer clear of consumers. Cancellation can be seen as a sign of high risk, and often as a bad risk. You may find it difficult to find an insurer that will extend coverage at a reasonable rate. Some companies won’t extend coverage. Even if you have a clean driving record, you will be considered a high-risk driver.
Some insurers will overlook cancellations that involve late payments. If you agree to pay your annual premiums in advance, some insurers may be open to accepting this. Such flexibility is rare for DUIs and other serious traffic violations that lead to the suspension of a driver’s license.
You will need to search for a new insurance company if your car insurance policy was cancelled. Shopping around for the lowest rates is a great idea. Although your options may be limited, rates will still fall within a wide range. Compare quotes to determine the best coverage for your family.
